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From Banking and Finance Law Daily, January 8, 2016

FTC’s Operation Collection Protection halts illegal debt collection activities

By Lisa M. Goolik, J.D.

The Federal Trade Commission has temporarily—or, in some cases, permanently—halted the debt collection activities of AFS Legal Services, Samuel Sole and Associates, Warrant Enforcement Division, and Williams, Scott & Associates, along with their affiliates, aliases, and owners. According to the FTC, the debt collectors allegedly impersonated investigators and law enforcement officers, threatened to arrest or sue consumers if they did not pay, or attempted to collect on debts that consumers didn’t owe. The actions are a result of the FTC’s nationwide law enforcement initiative Operation Collection Protection.

AFS Legal Services. In November 2015, the FTC brought an action against National Payment Processing LLC; National Client Services LLC, also doing business as AFS Legal Services, AFS Services, Account Financial Services, and Account Financial Solutions; and two of their owners for allegedly impersonating investigators and law enforcement and threatening to arrest or sue consumers if they did not pay. The defendants have agreed to be bound by a preliminary injunction, pending the litigation, in which they are prohibited from using the illegal collection tactics described in the FTC’s complaint. They are also barred from activities that violate the FDCPA.

Samuel Sole and Associates. Similarly, in May 2015, the FTC temporarily halted the operations of Premier Debt Acquisitions LLC, also doing business as PDA Group LLC; Prizm Debt Solutions LLC, also doing business as PDS LLC; Samuel Sole and Associates LLC, also doing business as SSA Group LLC and Imperial Processing Solutions; and two of their owners. The FTC alleged that the defendants had impersonated law enforcement officials or process servers, threatened to have consumers arrested for nonpayment, falsely threatened consumers with lawsuits and wage garnishment, and withheld information consumers needed to confirm or dispute debts.

The defendants agreed to a permanent injunction that will ban them from debt collection activities, and prohibit them from misrepresenting material facts about financial-related products and services and from profiting from their former customers’ personal information. The defendants must also pay approximately $2.2 million, representing the amount of the defendants’ debt collection revenue, which will be partially suspended upon surrender of certain personal assets, including real estate.

Warrant Enforcement Division. In addition, Municipal Recovery Services Corporation, doing business as Warrant Enforcement Division, and its owner have agreed to settle FTC charges that they violated the FTC Act when they sent consumers letters and postcards that falsely threatened consumers with arrest if they did not pay overdue municipal utility bills, traffic tickets, court fines, and other debts for local governments in Texas and Oklahoma.

The proposed order prohibits the entities from misrepresenting any material fact while collecting debts and imposes a $195,000 judgment that is suspended based on the defendants’ inability to pay. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

Williams, Scott & Associates, LLC. The FTC has also obtained a permanent injunction against the final individual in its case against Williams, Scott & Associates, LLC. On Nov. 4, 2015, the court granted summary judgment in the FTC’s favor, banning the individual from debt collection activities and ordering him to pay more than $565,000 for using deception and threats to collect on “phantom” payday loans and other debts that consumers didn’t owe. A previous order banned Williams, Scott & Associates, LLC, from debt collection activities and assessed a $3.9 million penalty.

National crackdown. The FTC’s initiative, Operation Collection Protection, partners more than 70 local, state, and federal law enforcement agencies to target debt collectors whose illegal tactics include harassing phone calls, false threats of lawsuits and arrest, attempts to collect phony debts, not providing consumers with legally required disclosures, and noncompliance with state licensing requirements. Since the initiative was launched in November 2015, it has led to more than 130 enforcement actions in the past year.

Companies: Account Financial Services; Account Financial Solutions; AFS Legal Services; AFS Services; Imperial Processing Solutions; Municipal Recovery Services Corporation; PDA Group LLC; PDS LLC; Premier Debt Acquisitions LLC; Prizm Debt Solutions LLC; Samuel Sole and Associates LLC; SSA Group LLC; Warrant Enforcement Division; Williams, Scott & Associates, LLC

MainStory: TopStory ConsumerCredit DebtCollection EnforcementActions FairCreditReporting Loans OklahomaNews TexasNews UDAAP

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